Fire & Flower to Acquire Pineapple Express Delivery to Advance E-Commerce Digital Platform Strategy
Transformational acquisition will complete Fire & Flower’s proprietary technology stack and enable a true consumer platform experience from customer acquisition through to fulfillment via same-day delivery to customers
TORONTO, Dec. 9, 2021 /CNW/ – Fire & Flower Holdings Corp. (“Fire & Flower” or the “Company”) (TSX: FAF) (OTCQX: FFLWF) and its wholly-owned subsidiary Hifyre™ Inc. (“Hifyre”), today announced entering into a definitive agreement to acquire Pineapple Express Delivery Inc. (“Pineapple Express”), Canada’s largest delivery and logistics company serving the cannabis sector (the “Acquisition”). Upon completion of the Acquisition, Fire & Flower will have all the necessary components in its business to deliver a full consumer technology platform experience, supported by a network of more than 100 retail stores and full same-day delivery to cannabis consumers.
The addition of Pineapple Express to the family of Fire & Flower properties will provide a clear value proposition to Canadian cannabis consumers through unrivaled convenience and speed of delivery at compelling prices due to efficiencies realized through a distributed asset-light retail network.
Founded by seasoned delivery pioneer, Randy Rolph, Pineapple Express has quickly grown to prominence as the largest player in the cannabis delivery space – completing more than 40,000 deliveries per month to recreational and medical cannabis customers across Canada. The addition of best-in-class logistics and delivery management expertise will enable Fire & Flower and Hifyre to provide delivery software and fulfillment technology to its existing network and in the U.S. and European markets.
The Acquisition of Pineapple Express will complete our proprietary technology stack and allow us to deliver a seamless customer experience from online customer acquisition and discovery at our top-of-funnel sites such as PotGuide.com and Wikileaf.com, through a personalized online or in-store shopping experience powered by Hifyre and our Spark Perks™ program and now culminating in best-in-class fulfillment service right to our customers’ doors through Pineapple Express.
Trevor Fencott, Chief Executive Officer of Fire & Flower
To our knowledge, this complete cannabis consumer technology platform is the first of its kind in the legal cannabis industry and will power our asset-light retail strategy, not just in Canada but across North America. We see this as an example of the advantages of building, testing and hardening technology and systems in the federally legal Canadian market before deploying them to the U.S. and other emerging markets.
Fencott continued, “Cannabis customers shopping in the illegal market are accustomed to purchasing products online which are delivered directly to their door, often in the same day. The Acquisition of Pineapple Express will provide a clear value proposition to cannabis customers who are shopping in the legal market and offer a better solution and experience for those still purchasing from the illegal market. With our cannabis consumer technology platform in place and our strategic partnership with Alimentation Couche-Tard theat includes existing in future licensed co-located stores, we are well positioned to successfully execute on our asset-light strategy in new markets we enter, further driving shareholder value.”
Pineapple Express is thrilled to be joining Fire & Flower and Hifyre and we look forward to working with the team to continue to scale our delivery capabilities across Canada and the U.S.
Randy Rolph, Founder and Chief Executive Officer of Pineapple Express
In looking at what was going to allow our company to grow in a way that fulfills our ultimate vision, it was clear that Fire & Flower, with its strategic partnership with Alimentation Couche-Tard, and its focus on building a global, future-focused, cannabis consumer technology platform was the right partner for us in our next evolution.
A summary of the anticipated benefits of the Acquisition include:
Customer Acquisition Channels
- Fire & Flower’s newly acquired online cannabis platforms, PotGuide.com and Wikileaf.com, along with retail brands and partner branded online dispensaries, significantly expand the Company’s e-commerce platform and collectively drive cannabis customers into its data-driven retail network, culminating in an expanded opportunity to collect cannabis consumer behaviors and deliver an enhanced retail experience.
Retail Fulfillment Network & Distribution Centres
- Cannabis products will be fulfilled through the Company’s retail network of more than 100 stores that will serve as distribution nodes, effectively transforming them from traditional brick-and-mortar shops into last-mile fulfillment outposts in communities across North America. The Company anticipates adding cannabis retail licenses to select, existing Pineapple Express distribution centres to fulfill delivery direct to consumers in major urban centres. In addition, licensed locations that are being built adjacent to Circle K stores will provide another layer to the Company’s distributed fulfillment network, further supporting the Company’s strategy to operate high-margin revenue channels on an asset-light basis.
Delivery & Logistics
- Pineapple Express will enable same-day delivery in key markets across Canada, leveraging their existing fleet of vehicles, drivers and dispatch personnel. Pineapple Express is powered by proprietary technology, including the CannDeliv platform, which will be added to the Hifyre technology stack.
Total consideration for the acquisition of Pineapple Express is payable by the Company by way of assumption and repayment of approximately $5.3 million in cash debt owed by Pineapple Express and the issuance of up to approximately 1,126,761 common shares of Fire & Flower, (subject to adjustment in accordance with the terms of the Acquisition, subject to Pineapple Express achieving certain performance-based milestones in the fiscal 2022 year). Pineapple Express revenue for the trailing 12-month period ended October 31, 2021 was approximately $10 million.(1)
The Acquisition will be completed by way of three-cornered amalgamation with a newly incorporated subsidiary of Hifyre. Completion of the Acquisition is subject to the satisfaction or waiver of customary closing conditions, including the approval of the TSX and approval by the shareholders of Pineapple Express at a shareholders’ meeting to be convened in January 2022. The Acquisition is expected to close in Q1 2022.
To learn more about Pineapple Express, visit https://pineappleexpressdelivery.com/.
About Fire & Flower
Fire & Flower is a leading, technology-powered, adult-use cannabis retailer with 100 corporate-owned stores in its network. The Company leverages its wholly-owned technology development subsidiary, Hifyre Inc., to continually advance its proprietary retail operations model while also providing additional independent high-margin revenue streams. Fire & Flower guides consumers through the complex world of cannabis through education-focused, best-in-class retailing while the HifyreTM digital retail and analytics platform empowers retailers to optimize their connections with consumers. The Company’s leadership team combines extensive experience in the technology, cannabis and retail industries.
Through the strategic investment of Alimentation Couche-Tard Inc. (owner of Circle K convenience stores), the Company has set its sights on global expansion as new cannabis markets emerge and is poised to expand into the United States when permitted through its strategic licensing agreement with Fire & Flower U.S. Holdings upon the occurrence of certain changes to the cannabis regulatory regime.
Fire & Flower is a multi-banner cannabis retail operator that owns and operates the Fire & Flower, Friendly Stranger, Happy Dayz and Hotbox brands. Fire & Flower Holdings Corp. owns all issued and outstanding shares in Fire & Flower Inc. and Friendly Stranger Holdings Corp., licensed cannabis retailers that own and operate cannabis retail stores in the provinces of Alberta, Saskatchewan, Manitoba, British Columbia and Ontario, and the Yukon territory.
To learn more about Fire & Flower, visit www.fireandflower.com.
- Preliminary and unaudited financial results are subject to customary financial statement procedures by the Company and its auditors. Actual results could be affected by subsequent events or determinations. While the Company believes there is a reasonable basis for these preliminary financial results, the results involve known and unknown risks and uncertainties that may cause actual results to differ materially. These preliminary fiscal results represent forward-looking information. See “Cautionary Statement Regarding Forward-Looking Information” and “Financial Outlook”.